---
title: "Liquidity Adjustment Facility (LAF): RBI Tool"
description: "The Liquidity Adjustment Facility (LAF) allows banks to manage short-term liquidity using government securities, crucial for monetary policy in India."
url: "https://modeldiplomat.com/learn/glossary/liquidity-adjustment-facility"
---

[New](https://modeldiplomat.com/)

#

Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

- The Liquidity Adjustment Facility is a Reserve Bank of India monetary-policy instrument that lets banks borrow or park funds against government securities on a short-term basis.
- What is the difference between the repo rate and the reverse repo rate under the LAF?
- How does the LAF differ from Open Market Operations?
- What are the MSF and SDF, and how do they relate to the LAF corridor?
- Why was the LAF introduced in India?

[Civil Service & Diplomatic Exams](https://modeldiplomat.com/learn/civil-services/glossary)Updated June 22, 2026

Go beyond the definition

## Research Liquidity Adjustment Facility (LAF) like a delegate

Model Diplomat's AI drafts position papers, speeches, and country research with real sources — built for MUN and politics students.

## Research it like a delegate

Research on modeldiplomat.com

## Ask a follow-up about Liquidity Adjustment Facility (LAF)

Open a cited briefing in Model Diplomat search — timelines, positions, and sources you can use in committee or exam answers.

[Start research on Liquidity Adjustment Facility (LAF)](https://modeldiplomat.com/search?q=Explain%20Liquidity%20Adjustment%20Facility%20\(LAF\)%20%E2%80%94%20key%20dates%2C%20actors%2C%20positions%2C%20and%20sources)

Example

In May 2022 the RBI's Monetary Policy Committee raised the LAF repo rate by 40 basis points to 4.40 per cent in an off-cycle meeting, beginning the post-pandemic tightening cycle that took it to 6.50 per cent by February 2023.

Keep learning

## Go deeper than the definition

[Explore all Civil Service & Diplomatic Exams lessons](https://modeldiplomat.com/learn/civil-services)[Test yourself with a quiz](https://modeldiplomat.com/learn/glossary/quiz/civil-services)

## Take Liquidity Adjustment Facility (LAF) beyond the glossary

Ask the AI research engine built for diplomacy — get briefings, position papers, and speeches with sources you can cite in committee.